New Approach and More Equitable Solutions for Credit Recovery: The Case of Non-Performing Mortgage Loans

The paper, after a short analysis of the disappointing results of the widespread procedures of non-performing mortgage loans recovery, proposes a new approach to the problem and new recovery models. The aim is, in particular, to avoid unfair redistributions of wealth such as those that occur with the most widespread procedures that benefit the speculative investors and damage the lender bank, the debtors and the local economy. Research has been focused on multi-effect solutions that are able to achieve a fair and efficient tradeoff among not easily compatible aims, such as those of a fast cleansing of the bank’s balance sheet, as Supervisors require, the complete credit recovery for the bank, the grant of a second “chance” to the debtor with a consequent, implicit, sustainment of the local economy. The essential feature of the solutions presented here, which may differ according to the different size of the bank, is a requalification of the role of the mortgaged Real Estate, with the passage from the traditional function of a more certain credit recovery, though not at all certain in the amount, and in any case very complicated, to a new function as “bridge” for the possible reprise by the debtor, with consequent ant-cyclical effects for the economy and an easier and more integral credit recovery for the bank.